Connecting with WIPO

Green Technology Diffusion: Insights from Industry

February 2014

By Jennifer Brant, Director, Innovation Insights

Every government wants to attract and support the development of cutting-edge technologies. The deployment of new technologies can raise living standards, create jobs, give rise to centers of excellence, stimulate growth and investment, and facilitate the delivery of important services like electricity and healthcare. New technology solutions will also be critical to improving our use of natural resources and helping governments manage the rising costs of delivering services and addressing pressing challenges, such as climate change, mitigation of which will require massive resources. The Secretariat of the United Nations Framework Convention on Climate Change (UNFCCC) has estimated that through 2030, it will cost as much as US$200 billion per year to keep the world at current global greenhouse gas (GHG) levels. We will not be able to afford this enormous price tag without technological advancement. By some estimates, innovation in clean technologies would reduce the cost of mitigation by as much as 50 percent.

Incentivizing innovation

How can policy-makers channel the flow of technology to their own countries? One approach would be to adopt policies that influence and motivate those currently engaged in technology development and dissemination. In so far as the private sector accounts for two-thirds of global research and development (R&D), and even more – some 80 percent – in relation to green technologies, industry is a strategic partner for any government looking to expand their country’s existing knowledge base. Companies can help by providing crucial know-how, funding and experience that can speed up and sustain technology dissemination.

Advancing the development of green technologies is a win-win, enabling governments to reduce GHG levels and preserve precious resources, while at the same time tackling energy poverty. At least 1.5 billion people worldwide lack access to energy. Another 1 billion lack reliable access to the energy they need. Developing countries are facing significant pressure to expand energy capacity. Bangladesh, for example, will need to more than triple its electricity production capacity in the coming decade to keep pace with growing demand. These countries need energy solutions that will enable them to meet demand in an affordable, green way.

But where does technology come from, and what incentives encourage the private sector in particular to innovate? It is complex. Identifying a large market can help. WIPO GREEN and the technology needs assessment (TNA) process that is part of the UNFCCC provide opportunities to identify common needs making it possible to identify opportunities to boost the purchasing power of a given region. With a big enough market and an enabling environment, it can make commercial sense for foreign companies investing in a particular region to hire a local workforce to install and service their technology or even to manufacture it locally. Over time, such arrangements generate local expertise, industry and can spur follow-on innovation.

While the market does not reward innovations that increase cost even if they reduce pollution, market incentives do play an important role in encouraging the development of new green solutions that are more cost-effective in the long-run. There are significant and growing investments in clean technology because governments and other customers are demanding such solutions with interest tending to spike in the presence of market signals such as rising fossil fuel prices.

Technology flows boost development

Clean technologies are developed and diffused globally on an ongoing basis. Technology transactions take place around the world, every day, in developed, developing, and least developed country markets, through: product sales; collaboration and sharing of know-how; joint development and commercialization of new products and services; patent licensing; equipment maintenance; and outsourcing production of components of end products. All these processes strengthen local capacity.

Even the simple sale of an innovative product, which transfers technology to its user through the product itself, can generate a positive development impact. For example, an electricity generating solution that is deployed in a place without electricity, even if fully developed and maintained by outside experts, provides energy to the local population. This provides a platform for increased productivity as well as improved living conditions. Simply securing access to a new technology can inspire new innovation.

Optimizing technology diffusion

A range of local conditions can enhance technology diffusion, particularly the capacity of the recipient community to absorb the technology. This is fundamental. The skill and knowledge of the local workforce is an important determinant of the types of solutions that will be deployed in a given jurisdiction, as well as the type of collaborative relationship that will evolve between local and outside partners. Enabling regulatory policies and a sound investment environment can support technology transactions: and partnership, which accelerates the sharing of know-how, enhances the sustainability of technology deployment.

Effective protection of intellectual property (IP) rights is one component of a sound environment for deploying green technology. The contribution of IP rights to green technology diffusion is context-specific, and IP rights are not the main driver in all cases, especially in lower-income countries where factors such as markets, access to financing, and absorptive capacity are considerably more influential.

The Jenbacher is part of General Electric’s portfolio of innovative technologies that offer businesses and communities around the world the ability to generate reliable and efficient power at or near the point of use at any time using a variety of waste materials. (Photos: General Electric)

Turning waste into energy

The Jenbacher from General Electric (GE) is a technology that can convert waste materials into energy. Organic waste materials are anaerobically “digested” by microorganisms that break them down, ultimately producing biogas composed of methane and carbon dioxide. This can be burned just like natural gas, togenerate energy.

By using local waste “resources”, countries can produce power and also get rid of unwanted waste and sometimes lower carbon dioxide and methane emissions. The Jenbacher gas engines are particularly suited to establishing energy supplies in remote areas. More than 5,100 engines with a total energy generating capacity of 4,300 megawatts have been installed in waste-to-energy applications across the world.

GE works with its customers to adapt the gas engines to break down and treat a wide variety of local waste materials – manure, landfill, and even rice hulls. For instance, one Jenbacher biogas engine is successfully powering a cattle manure‐methane cogeneration plant at a large dairy complex in the Indian state of Punjab. In Chile, three engines are being used by the water utility, Aguas Andinas, for wastewater treatment at a plant near Santiago; the engines can produce up to 60 percent of the plant’s power requirements with renewable energy (while reducing greenhouse gas emissions), by using the sewage sludge collected at the treatment plant. And in Brazil and the Philippines, GE’s Jenbacher gas engines are being used in Clean Development Mechanism (CDM) projects to reduce methane emissions from landfill gas.

The role of IP in supporting technology transfer deals

At the same time, the patent system facilitates green technology development and diffusion in a number of ways, including by supporting partnerships. A predictable IP system underpins technology transfer deals and the exchange of know-how. IP rights help define what each company brings to a partnership, which can be critical especially for small and medium-sized enterprises (SMEs) partnering with larger technology companies. IP rights can also be used to determine ownership and management of joint inventions. Overall, we can think of IP rights as an important enabler for innovation.

Driving knowledge transfer through partnership

No single company, individual, country, or sector has all the answers. Innovators need to work together and build on each other’s work. Partnership – putting our collective knowledge and creativity to work – will be critical in finding innovative solutions to overcome the most pressing global challenges. A collaborative approach is especially vital where climate change is concerned, since local circumstances are an integral part of the process of identifying the most effective tools to mitigate and adapt to it.

Partnership is also critical to getting know-how where technology needs to go. Greener technologies must not only be developed, they must also be deployed where they will have the most impact. The complex, multi-dimensional process by which technologies are disseminated to different places is often referred to as “technology diffusion”. It results in the sustainable deployment of appropriate and/or adapted technology solutions across countries, over time. It is not something that can happen overnight, and it requires an adequate knowledge base. In the absence of local capacity to use and maintain it, a technology solution may not be used correctly – or at all. Diffusion happens gradually, organically; it can be accelerated by the right policies and conditions, but it cannot be forced.

Partnership works best when partners feel comfortable sharing their knowledge, for instance in environments where there is sound protection for IP rights including patents and trade secrets. Policy-makers should not focus on merely gaining access to a technology or investment, but rather on attracting technology partners that will invest and share what they know over the long-term. Efforts by governments to force knowledge transfer are generally counter-productive, since they make it less likely that technology providers will collaborate and share knowledge with local entities. Sometimes such policies can even discourage new technology development.

Nokero develops proprietary solar-based technologies, such as lights and phone chargers that are safe, environmentally-friendly and affordable. (Photo: Nokero)

Nokero’s solar light bulb

Nokero, a company founded by inventor and patent attorney Stephen Katsaros, develops proprietary, solar-based technologies, such as lights and phone chargers that are safe, environmentally-friendly and affordable. By providing accessible, affordable and high-quality solar energy, the company aims to improve access to energy and eliminate the need for unhealthy, dirty and costly energy sources such as kerosene, which is widely used in low and middle-income countries. Nokero was a 2013 winner of the Patents for Humanity competition run by the United States Patent and Trademark Office (USPTO), which recognizes patent owners and licensees for their efforts in addressing development challenges.

Partnership is integral to Nokero’s success. The company partners with entities, including non-governmental organizations (NGOs), who know their local markets and can ensure the technologies are adapted for, get to, and are used by, the communities that really need them. The partners provide valuable knowledge of local conditions and help the company improve its offerings in response to testing and customer feedback. Nokero, which is short for “no kerosene”, refers to its activities as “impact inventing”, a form of social entrepreneurship. The company’s leadership considers that ensuring technology solutions meet actual needs in different markets and can be sustainably deployed is at the heart of commercial success.

Attracting technology flows

Governments have a key role to play in supporting green technology dissemination and can influence the flow of technology to their own countries. They can implement sound climate change policies to incentivize the deployment of clean technologies. They can foster a favorable investment climate, to help attract technology partners. In addition, governments can increase fair competition by removing local content and procurement restrictions, which tend to raise the price of deployment. And they can eliminate tariffs and other customs barriers that make clean technology solutions more expensive, including at the regional level, as the Asia-Pacific Economic Cooperation region (APEC) did in 2012.

We face daunting climate change-related challenges, but we are also witnessing remarkable advances in cleaner technologies. Such advances will have a tremendous impact on our ability to effectively address climate change as well as other global challenges. The development and broad diffusion of technology solutions can be accelerated by:

Working together. Partnership among innovators and collaboration between industry and government will be crucial to addressing emerging needs.

Putting the right policies in place. Government investments in domestic absorptive capacity and appropriate policy frameworks, including effective IP systems, can complement market incentives. Enabling policy frameworks play an important role in supporting the broad deployment of innovative technologies.

Building local knowledge. Partnership accelerates the transfer of know-how, enhancing the sustainability of technology deployment. Collaboration over time contributes to the building of local skills, knowledge, and capacity for follow-on innovation.

The UNFCCC’s and TNAs

The UNFCCC’s TNA process is designed to assist in identifying and analyzing priority technology needs for mitigation and adaptation to climate change. These assessments can be the basis for initiatives that seek to facilitate the transfer of, and access to, environmentally sustainable technologies and know-how in implementing Article 4.5 of the Convention.